Yesterday (March 21), Chancellor George Osborne donned his best suit and broke out the famous red case to deliver his third Budget in office. With bigger fish to fry (like saving the economy) budgetary changes likely to affect motorists were kept to a minimum but those that did make it in were telling, especially the decision go ahead with the proposed 3p per litre fuel increase set to come into effect in August. After adding VAT this means drivers will pay an extra 3.62p per litre come August 1.
This move was met with incredulity from the motoring lobby with AA president Edmund King commenting: "At a time of record prices at the pumps, the August increase in duty is a budget blow-out which will force drivers off the road... Ironically, such a hike in duty doesn't necessarily help Government finances, as people will cut spending at the pumps and in shops, and it could fuel inflation."
Osborne said the government was looking at reforming vehicle excise duty (VED) in the medium term to "ensure all motorists make a fair contribution to maintaining the public finances, and to reflect continuing improvements in fuel economy" but held off on making any changes further than rises linked to inflation. He also wants to introduce a direct debit payment system that would allow drivers to spread the cost of VED over twelve months.
The biggest news was on the company car tax front with zero and ultra-low emission vehicles the hardest hit. Currently these cars are exempt from tax, but come 2015 company car drivers will have to pay 13 per cent of the car's value in tax, rising to 15 per cent in 2016/17. Vehicles emitting more than 74g/km will be hit by a one per cent increase in 2014/15 with a further two per cent tacked on in 2016/17. The maximum company car tax rate will also increase from 35- to 37 per cent in 2015/16.
Paul Healy - 22 Mar 2012